Disney hopeful DirecTV Now, other OTT deals will kick-start ESPN growth

ESPN
Disney CEO Bob Iger said distribution on the new OTT pay-TV platforms is cause for optimism.

While the sagging performance of its ESPN unit spearheaded an 11% drop in operating income for Disney’s media networks in the fourth quarter, conglomerate CEO Bob Iger sees green shoots in recent carriage deals for virtual-MPVD services. 

“We're certainly well aware of the attention paid to ESPN, and we're pleased with our implementation of strategies aimed at further strengthening ESPN's position and expanding its growth opportunities,” Iger said to investors Tuesday, according to a Seeking Alpha transcript. “As outlined in our last call, these include launching ESPN on all new multi-channel services, including Sling TV, PlayStation Vue, DirecTV Now, and the soon to be launched Hulu.”

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Nielsen has reported steady drops in ESPN’s penetration in the pay-TV ecosystems, with cord-cutting and skinny bundling cutting into the national sports network’s distribution. Nielsen, for example, has kept up a steady drumbeat of reports regarding ESPN’s falling subscriber count. Ad sales haven’t been great either—they were down 7% in the fourth quarter.

Iger, however, said distribution on the new OTT pay-TV platforms is cause for optimism.

“My confidence in ESPN is due to a number of things, but clearly the deals that we have done with new platform owners, mostly over-the-top, have already yielded some nice gains from those services in subs, but they're not right now being counted fully by Nielsen,” Iger said. “We’ve also done a deal with Hulu. And we have done a deal with another entity that has not been announced, and we're in discussions with others."

"So it seems like we're on the cusp of some significant growth for new entrants in the multi-channel marketplace,” Iger added. “And what we like about them is they are mobile friendly or mobile first, their user interfaces tend to be very strong, and their pricing is priced substantially lower than the expanded basic bundle that most of the MVPDs are offering. And that obviously we think gives us a chance to both attract consumers that may not sign-up for multi-channel service or hold consumers into multi-channel subscriptions.”